City Creek Center means uncertainty for The Gateway

There is cannibalization. We all expected it. There is going to be an initial impact to Gateway that's going to be pretty significant.—Darrell Tate

SALT LAKE CITY — A window sticker depicting a low-resolution image of Olympic Legacy Plaza plasters the façade of the former McGrath's Fish House at The Gateway mall. Other windows have similar images of the mall or stock photos of smiling people.

The stickers are a colorful distraction that betray what's inside: a 2,200 square-foot property that has been vacant for two years, part of the residue of recession that has strained and in some cases crippled the economy.

The space will be filled by a new tenant in March, the Mexican restaurant Costa Vida. But that month The Gateway, which opened only 10 years ago, will face perhaps its biggest challenge with the planned March 22 opening of City Creek Center only a few city blocks away.

No one will confirm how many stores are leaving The Gateway for the new mall. But the Deseret News has learned that 15 stores currently located at The Gateway have submitted plans called tenant improvement permits with Salt Lake City to open new stores at the City Creek Center. In addition, four stores that recently closed their Gateway locations — American Eagle, Bebe, Express and Gymboree — will soon open in the new downtown development.

With 13 empty storefronts currently at Gateway, it could leave more than two dozen spots for Gateway to fill just as the press of competition gets under way at City Creek.

Many of the 15 stores that have submitted permits for City Creek have not announced plans to leave The Gateway. But Darrell Tate, who works in the retail division of Commerce Real Estate Solutions, said it is uncommon for most stores to have two locations in such close proximity.

"There is cannibalization," Tate said. "We all expected it. There is going to be an initial impact to Gateway that's going to be pretty significant."

City Creek Center is situated on property once occupied by the Crossroads Plaza and the ZCMI Center. Those two malls, both built in the 1970s, faced similar problems with stores leaving when The Gateway opened in 2001. The Church of Jesus Christ of Latter-day Saints purchased the property in 2003 to revitalize downtown.

Although the opening of The Gateway contributed to the decline of retail centers in the early 2000s, some say that won't be the case when City Creek Center opens.

Tate said the two malls can coexist because they will attract different tenants, referring to City Creek Center as a traditional regional mall and The Gateway as a "lifestyle center."

New retailers also have plans to open stores in The Gateway in the near future, said Heather Nash, director of marketing for The Gateway.

"Our leasing team continues to meet with local and national retailers and we will make announcements as these deals are finalized," she said. "We will continue to be an active lifestyle center serving the public seven days a week."

Dee Brewer, marking and sponsorship director for City Creek Center, said the opening of the new development will benefit all retailers downtown.

"When you attract people downtown, it's an opportunity," he said. "Everybody wins. Downtown is going to be a destination the way it hasn't been in a long time."

City Creek Center will house more than 20 new-to-state or new-to-market stores, including high-end retailers like Tiffany's and Coach. It also has two anchor department stores in Macy’s and Nordstrom.

"When Sephora comes in and Nordstrom comes in, they're going to give us a lot of competition," said J.C. Kover, an employee at the beauty boutique Apothica which sits adjacent to the former McGrath's Fish House site.

Kover said a number of stores have closed their doors in preparation for a move to City Creek Center. But it’s still wait-and-see for most who work retail at The Gateway.

"They haven't really been informing us," she said. "Even in their newsletter, no one's said anything."

Although Trolley Square could feel the effects of City Creek Center opening, Restoration Hardware is the only store from the shopping center that has submitted tenent improvement permits for the new mall.